Investing 101: The Best Amount Of Money To Have For Starting An Online Business

The best amount of money to have for starting an online business depends on the product that you’re selling. If you’re into clothing or decors, you might only need about one grand to have a decent start on your e-commerce business. Electronic products and video games would require a higher capital due to the price of individual pieces. It will pay off if you scout and compare prices before purchasing inventories of the goods you intend to sell.

Aside from buying actual goods, you can also consider different modes of e-commerce like drop shipping, fulfillment, and affiliates. All these have different budget requirements that we will discuss below.

Setting up your brand would also entail expenses like establishing a website, putting your business in supplier/retailer directories, and more. There would be more expenses if you’re going to hire additional personnel, acquire an office, rent storage spaces, and partner with a logistics provider. Without further fluff, here are some options that you have for an online business together with the possible capital that you’ll need.

Wholesaling

The good thing about wholesaling is you can officially start a business as long as you have at least $100 to $500 and gumption. Many suppliers of cheap products don’t require minimum orders which is your chance to start making a profit. You can sell it to retailers you personally know and make lots of turns out of it. Once you have more income, you can establish your online branding to reach more possible buyers. So what is the best amount of money to have for starting an online business? Not so big for wholesaling!

Platforms like WordPress will allow you to start a website for as low as $60 a month complete with a custom domain, hosting, and a shopping cart plug-in. Shopify would be a good option too if you want to save more money.

Aside from branding, it’s important that you partner with a reliable supplier. If you’re selling video games, choose a provider that can give you a heads up on the latest releases. That way, you can secure inventories of the top-selling items in the market.

However, wholesaling will require you to rent a storage space for the goods as well as process orders for delivery. It might be a lot of work but the profit is considerably high.

Drop Shipping

In case you want to skip the hassle of paying for a warehouse and maintaining large personnel, you can try drop shipping. This is the process of marketing someone else’s products on your online platform where you can make price cuts to earn a profit. The orders are processed and delivered by the supplier and all you have to do is alert them when an order comes. It could be an easy way but drop shipping also has a share of negatives. It’s also a good option if you have a low capital as the best amount of money to have for starting an online business

Since you don’t personally handle products, you don’t have control over its quality. An unscrupulous supplier could jeopardize the integrity of your site and cost you potential buyers. You don’t also get to interact with the customers directly as some suppliers take the responsibility of addressing customer queries.

When it comes to the budget, drop shipping could be more cost-friendly. You first have to establish a website or portal where a prospective buyer could place an order that may have the same cost with that of wholesaling. Afterward, you have to partner with a drop shipping supplier to get started. It’s safe to say that your $400 can make you go places already.

Fulfillment

If you know the Amazon FBA program, you probably have an idea as to how a fulfillment business works. It’s almost the same with drop shipping where a third party processes and delivers the orders. However, the difference is that you have to purchase the inventories even before an order is placed. You will then send it to a fulfillment company’s storage area for them to keep.

This process is also called as the “pick, pack, and ship” e-commerce option. Your stored goods will be picked by the consumer then packed and shipped by the fulfillment company. It’s time-saving like drop shipping but availing the service of a third party would entail costs if you’re thinking of the best amount of money to have for starting an online business.

In the case of FBA or Fulfillment By Amazon, the cost of shipping is already at the cost of fees you paid together with the warehouse rent where your products are kept. The orders would arrive at the buyer within two to five days.

When you sign for a Professional Amazon FBA account, you’re going to pay an upfront $40 fee per month. The cost of storage and processing of orders might differ depending on the scale of your products.

Affiliate

For those who don’t want to think about inventories and storage terms, setting up an affiliate site would be the cheapest and convenient choice. It starts by coming up with high-quality content featuring product reviews and posts that help answer customer queries. When an affiliate site succeeds in convincing a prospective buyer to place a purchase, the owner will earn a commission.

But since the income here is commission-based, the profit is lower than the first three means of online business. Still, affiliate businesses are the easiest to setup and maintain. You no longer have to purchase products nor think about processing the orders. Somehow, it has a similarity with drop shipping but the difference is you cannot impose a pricing matrix like how the latter works.

Basically, a $300 capital would already be a good start as long as you’re the one beefing up your own affiliate site’s content and promotion. This is a less demanding option for your business, but if you want to make at least $2,000 a month, you have to work hard.

The best amount of money to have for starting an online business isn’t really that big. You can start small and expand your business the moment that you have enough resources to do so. Do you have anything to share? Feel free to ping us below!